Government launches £7.3bn National Wealth Fund – reaction

by | Jul 10, 2024

Following the announcement from Chancellor Rachel Reeves that the UK National Wealth Fund is now underway to power green investments and infrastructure development as ‘new industries of the future’, as outlined in the Labour party manifesto.

Headed by a taskforce including former BoE Governor, Mark Carney, the strategy behind the National Wealth Fund is intended to boost the Chancellor’s drive for growth which underpins her economic strategy.

Commenting on the news, Louis Taylor, CEO, British Business Bank said “We welcome this announcement by the Chancellor, Rachel Reeves, that a new National Wealth Fund will be established to drive economic growth and unlock investment in the UK.  Key institutions, including the British Business Bank and the UK Infrastructure Bank, will become aligned under the new National Wealth Fund to invest in the new industries of the future, supporting the government’s new Industrial Strategy.

This announcement is a strong endorsement of the British Business Bank’s 10-year track record, broad skills and capabilities including our position as the UK’s largest domestic investor in venture and venture growth capital and the most active late-stage investor in UK life sciences and deeptech.

We expect the National Wealth Fund to create a single coherent governmental offer for businesses and a compelling proposition for investors that will help mobilise billions more in private investment in line with a lot of our recent work, enabling us to catalyse external institutional capital, including pension fund investment, into UK high potential companies, by leveraging the British Business Bank’s scale, networks, and track record.”

Also commenting, James Walton, Partner in the Banking & Finance team at law firm Charles Russell Speechlys, said about the new scheme : “There is a huge wall of private capital out there with appetite to invest in the UK, particularly across the sectors which the National Wealth Fund appears to be focussed on – green and high growth industries.  We can expect that there will be significant interest in the scheme from investors, but the acid test will be how accessible the funds are for the relevant businesses. When developing these schemes, legally there is a lot to think about to ensure that funds are allocated in the right places for the right reasons.”

Nigel Peaple, Director of Policy and Advocacy at the PLSA said:In examining the role pensions might play in providing additional investment in UK growth assets, the PLSA recommended last year that the Government take steps, alongside the British Business Bank, to improve the pipeline of investible assets available to pension funds. We welcome the Government acting decisively to set out plans for a National Wealth Fund for this purpose and look forward to working in partnership to help develop solutions that work for savers, pension funds and the economy.”

Naureen Zahid, Director of Investor Relations at OpenOcean, said: “This can’t become merely a rebranding exercise. It’s reassuring to see the government resolve any confusion between the UK Infrastructure Bank (UKIB) and National Wealth Fund (NWF). However, clear differentiation and streamlined operations are essential to avoid bureaucratic redundancies that could hamper the fund’s effectiveness. Investors will be watching closely to ensure that the NWF genuinely catalyses growth rather than just shifting existing structures around.

While working with local mayors to tailor finance and investment strategies for specific needs is a step in the right direction, the government must set out clear plans for regional investment ecosystems across the country. By providing various investment opportunities without dictating asset allocation and sharing information on different performance metrics, it can create incentives to invest, rather than mandates. This means building confidence, especially among those invested within private markets who have been apprehensive in investing in the country. That is a key prerequisite before the government sees real action, translating as reduced and stable inflation figures close to its target, guided by strong macroeconomic policy.”

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